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Reynolds American increases political giving in 2014

May 7 2015 - 12:46pm

Reynolds American, Inc. (RAI), the second-largest U.S. tobacco company and based in Winston-Salem, North Carolina, has disclosed its political spending numbers for 2014. The company began reporting political donations in 2012 in response to a shareholder who requested “greater transparency.”

The company ranks at No. 11 in the Facing South/Institute for Southern Studies’ “Tar Heel Power Brokers” report, a study measuring political influence of powerful North Carolina groups based on their lobbying and election spending. Reynolds spent over $950,000 in state elections from 2012 to 2014 and employs three lobbyists in Raleigh. They include Tom Fetzer, the former N.C. GOP chairman who was the state’s third-most powerful lobbyist according to a survey from the N.C. Public Policy Research Center.

Last year’s RAI disclosure report revealed a $50,000 donation in 2013 to the Renew North Carolina Foundation set up to boost Gov. Pat McCrory’s policies; the Foundation is a 501(c)(4) “social welfare” nonprofit that is not required to disclose its donors. The latest disclosure shows that in 2014 RAI gave $50,000 to another 501(c)(4) group, North Carolina House Legislative Partners; that group was set up to support Republican state House members though it cannot legally coordinate activities with them.

House Legislative Partners transferred money to a related nonprofit, the NCHLP Education Fund, which paid for a $70,000 ad supporting Republican House District 88 candidate Rob Bryan of Mecklenburg County. Tax documents from 2013 show that House Legislative Partners took in $258,000 in 2013 and spent $184,000 on “advertising and promotion.” Tax forms from 2014 are not yet available.

In total, RAI gave at least $4.3 million to a wide range of political nonprofits and PACs in 2014, up from approximately $3.3 million in the previous year.

The top national groups receiving money from RAI in the period from 2012 to 2014 are:

* Republican State Leadership Committee. RAI is North Carolina’s leading donor to the RSLC, a Washington, D.C.-based 527 political organization that helps elect Republicans to state office. In 2014, RAI gave over $800,000* to the RSLC, which contributed over $1.3 million to North Carolina-based political groups, primarily to Justice for All N.C. (see below). RAI is North Carolina’s biggest donor to the RSLC, having given over $2.1 million since 2012.

* Republican Governors Association. The RGA, another Washington, D.C.-based 527 group, has also benefited from RAI contributions totaling over $1.1 million from 2012 to 2014. In 2014, RAI gave $130,000, less than the previous two years. The RGA poured over $4.9 million into North Carolina’s 2012 gubernatorial race benefiting McCrory, and it spent considerably to help elect GOP governors in other states in 2014.

* Democratic Governors Association. RAI also gives to national Democratic groups but on a smaller scale. In 2014 it increased its giving to the Washington, D.C.-based DGA, with the total since 2012 close to $429,000 – just under half of what the company has given to the RGA. In 2012, the DGA spent $2.9 million supporting North Carolina Democratic gubernatorial candidate Walter Dalton.

* GOPAC. RAI has consistently given to GOPAC, sending over $412,000 its way in the last three years. The Arlington, Virginia-based 527 group, which trains Republican candidates at the state and local level, hasn’t spent directly in recent North Carolina state elections. However, GOP state Sen. Justin Burr who represents Stanly and Montgomery counties was one of the group’s 2013 “Emerging Leaders.”

RAI donates considerable sums to political groups at the state level as well. The top recipients from 2012 to 2014 in North Carolina include:

* N.C. Chamber of Commerce. The state’s leading business trade association is a major political force, with PAC spending, lobbying, and an independent expenditure arm. The Chamber network came in fourth in Facing South’s North Carolina power broker rankings. RAI gave the Chamber at least $146,000 in 2014 and a total of over $525,000 since 2012. Additionally, reports show RAI gave the Chamber’s independent expenditure PAC, NC Chamber IE, a $100,000 donation in February 2014. Chamber IE spent almost $690,000 in the 2014 primary and general state elections supporting mostly Republican candidates.

* North Carolina Judicial Coalition. RAI gave this state-based 527 political group $50,000 last year on top of the $100,000 it gave in 2012. The Coalition spent over $133,000 last year supporting conservative state Supreme Court Chief Justice Mark Martin, and in 2012 it unleashed over $1.9 million supporting Supreme Court Associate Justice Paul Newby.

* Justice for All N.C. While RAI did not contribute to this 527 group in 2014, it gave $30,000 in 2013 and $100,000 in 2012. Justice for All served mostly as a conduit for judicial money in 2012, sending $1.48 million to the N.C. Judicial Coalition. It also spent over $175,000 on ads supporting Newby’s Supreme Court campaign. In 2014, the group, which is funded mainly by the RSLC, spent over $1.3 million on unsuccessful attempts to unseat liberal Supreme Court justices Robin Hudson and Cheri Beasley.

RAI also reports over $943,000 in contributions to candidates and PACs during 2014, but, as in 2013, that doesn’t include any contributions to North Carolina candidates. The company has contributed to North Carolina state candidates and PACs, giving $128,000 in the 2013-14 election cycle, according to N.C. State Board of Elections reports. $89,000 of that total came last year.

Federal Elections Commission data show RAI gave $22,500 in 2014 to federal candidates from North Carolina.

RAI had good reason to invest in North Carolina politics in 2014: That year, the company was successful in pushing for a low new tax rate on the nicotine-infused oil used in electronic cigarettes, a growing segment of the tobacco industry. North Carolina is only the second state to implement such a tax, but its rate is considerably lower than that of Minnesota, the first state to establish the tax.

Below are charts detailing the political and advocacy groups that received the largest amounts of money from RAI from 2012-14, both overall and in North Carolina alone.

By Alex Kotch

* NOTE: RAI's self-reported contributions do not exactly match those reported in federal and state campaign finance reports. In cases where there are discrepancies, Facing South drew on reports filed with the Internal Revenue Service and the North Carolina State Board of Elections.

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